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The Biden administration announced Monday it will approve ConocoPhillips' Willow oil project located on a portion of Alaska's North Slope that is one of the last unspoiled wilderness areas in America.

Why it matters: The project, which is estimated to produce about 576 million barrels of oil over 30 years, is seen as a key test of Biden's climate commitments, as well as his energy priorities.

The big picture: The administration is not approving the entire project that ConocoPhillips originally asked for, which was for five well pads.

Instead, the go-ahead is being given for three pads, which will slightly reduce the project's emissions footprint and cut its impact on the sensitive ecosystems in the region.

The approval also relinquishes ConocoPhillips' land rights to about 68,000 acres in that area.

The Department of Interior's environmental analysis found the big new project would create annual emissions that equate to less than 1 percent of total U.S. annual emissions in 2019, the analysis found.

The total annual emissions from the project would be equivalent to the emissions from 1.2 coal-fired power plants per year, the environmental analysis found.

Between the lines: The total indirect emissions from the project, which refers to the emissions generated by burning the oil for energy, would amount to about 239 million metric tons of CO2-equivalent, the Interior Department's record of decision issued Monday states. 

Yes, but: Its approval comes as numerous studies show that in order to meet global climate goals, emissions from fossil fuels must rapidly decline.

The environmental analysis makes clear that the project would contribute to climate change.

Threat level: Interior's analysis details the sweeping changes global warming is having on the area where Willow would be built, which is one of the fastest-warming locations on Earth.

It even includes the possibility that permafrost thaw may pose challenges for project infrastructure, while also accelerating the release of greenhouse gases.

Editor's note: This story has been updated to include new information on the indirect emissions from the project. 

Biden administration approves Willow oil project in Alaska

The project could produce about 576 million barrels of oil over 30 years.

A bear looks after her three cubs in North Slope Borough, Alaska on May 25, 2019. Photo: Bonnie Jo Mount/The Washington Post via Getty Images

Energy

Climate change

Oil companies

Ominous forecasts about the impact of climate change serve as the backdrop for the world — led by U.S. lawmakers and companies — to debate big action on the problem, which could upend energy systems and our way of life.

Energy & Environment

A mystery facing C-suite execs and policymakers is how much oil and gas the world needs in the future — and therefore how much should be spent now to ensure enough flows.

Why it matters: Call it the Goldilocks problem: Too little investment could bring a pricey and ugly supply crunch — one that even slows energy transition.

Too much means stranded assets, infrastructure that locks in emissions, or both.

Driving the news: Enter new analysis from researchers with Columbia University's energy think tank that offers ideas on guiding investments without bailing on climate goals.

Right now, "the oil and gas industry is investing less than what is required to meet current demand trends but more than what is needed in the net-zero scenario," write Gautam Jain and Luisa Palacios with Columbia's Center on Global Energy Policy.

Current investments are "consistent with announced climate pledges by countries, indicating that companies are rationally adjusting to the progression of policy developments."

The big picture: Right now, producers are focusing on big returns (last year smashed records), paying down debt, and rewarding investors. 

But relatively sluggish capital investment also reflects "adjustments to policy signaling about phasing down oil and gas production." 

The "void" in private companies' investments is being filled by state-owned companies, especially in the Mideast, which "adds geopolitical risk to future supply."

Financial industry ESG initiatives are not a barrier to financing now, but they could be in the future, they write.

What we're watching: The paper offers a "toolkit" for managing existing assets and investing in "transition assets" — projects that help "meet energy security and geopolitical priorities within the confines of climate goals."

For banks, "a big focus of future financing could be conditional on unequivocal progress on flaring and venting of natural gas" to cut methane emissions. Multilateral development banks can focus on this in countries with state-owned oil giants.

The financial sector should focus on "transition ready" projects — think carbon capture, controls on flaring, "hydrogen-ready" infrastructure, and plans for retirement or retrofitting.

For policymakers, options include fast-tracking permits for transition-ready infrastructure; as well as ways to focus on decommissioning assets rather than having companies divest to actors with less stringent climate goals.

Zoom in: Oil and gas companies with a market cap over $500 million made more than $300 billion in capital investments in 2022.

That’s a jump from 2021, but far below levels in the mid-2010s.

Of note: Keep in mind that companies aren't just bobbing along in the policy and demand currents — they're actors that help shape these things.

Solving oil's Goldilocks problem

A new analysis offers a "toolkit" for balancing oil and gas supply needs without abandoning climate goals.

Illustration of a spoon in an oil barrel. 

Oil production

The United States will soon purchase 3 million barrels of oil in order to replenish the country's dwindling Strategic Petroleum Reserve, the Department of Energy said Friday.

The big picture: The Biden administration tapped into the country's Strategic Petroleum Reserve earlier this year to slow down rising gas prices.

Driving the news: The Department of Energy said the new purchase is "a good deal for American taxpayers" since the repurchasing price will be lower than the $96 per barrel average price it was originally sold for.

The move will also "strengthen energy security," the DOE said.

Context: Since March of this year, President Biden has withdrawn 180 million barrels from the reserve. In early November, he shrank the country's oil reserve to its lowest level since 1984, Axios reports.

Biden authorized the release of oil from the Strategic Petroleum Reserve to help bring down gas prices, which were soaring in early 2022.

What's next: The purchase will begin in January, the DOE said.

Go deeper: How the U.S. can make billions from selling oil

Biden to refill U.S. oil reserves after reaching lowest level in decades

The Department of Energy said the new purchase is "a good deal for American taxpayers."

US President Joe Biden speaks at the US-Africa Summit business forum.

President Biden speaks at the US-Africa Summit business forum. Photo: Michael Reynolds/EPA/Bloomberg via Getty Images

Heating costs are going to rise over the next few months, potentially posing an additional burden this winter for low-income families.

Why it matters: Heating bills for Americans will likely pile up during the cold months amid soaring inflation and rising consumer prices. Low-income families may struggle to pay these higher costs and face hard choices as temperatures drop.

Locations like New England that rely heavily on heating oil to keep homes warm will especially see the burden of a higher bill.

By the numbers: The Department of Energy's Energy Information Administration forecasted that heating costs will spike this year.

Heating bills for those with natural gas will jump 28% ($931), according to the EIA.

Heating oil costs will rise by about 27% ($2,354).

Electricity costs will rise about 10% compared to last year ($1,359).

Any homes using propane will see a 5% increase ($1,668).

The Energy Department did not immediately respond to Axios' request for comment.

The big picture: Energy costs will likely be their highest in 15 years this winter, the National Energy Assistance Directors Association told Axios.

Costs are rising due to higher fuel prices and increased demand due to forecasts of a colder winter, the EIA said.

The war in Ukraine's impact on natural gas prices will be showing up in household heating bills this winter, too, Axios' Matt Phillips writes.

Heating costs impact for low-income families

It's "going to be a tough year" for low-income families, Mark Wolfe, executive director of NEADA, told Axios.

Low-income households will feel a heavy burden as they will fall behind on paying energy bills and have to make choices about rent, heat and food, Wolfe said.

"In reality — this is one large income transfer from the bottom of the income population to the top," he told Axios. "Low-income families are becoming impoverished."

Go deeper: The war in Ukraine is showing up in your heating bill

Winter's burden: The new heating prices for 2023

Costs are rising due to higher fuel prices and increased demand due to forecasts of a colder winter.

Illustration of a stack of frozen dollar bills with snowcaps.

Saudi Arabia privately pressed several Arab countries to issue statements supporting the recent OPEC+ decision to cut oil production, according to a former U.S. official and an Arab official.

Why it matters: The goal of the Saudi push was likely to avoid being isolated by the U.S. and show that the decision, which angered the Biden administration, was a collective decision by all Arab nations in OPEC+. 

The big picture: The Biden administration blames Saudi Arabia for the move, which the U.S. claims will strengthen Russia.

Saudi officials claim the U.S. anger has nothing to do with Russia but is due to domestic political concerns about rising gas prices ahead of the midterm elections.

Catch up quick: Two weeks ago, OPEC+ announced production cuts of 2 million barrels per day starting in November.

The U.S. lobbied OPEC+ members, mainly Saudi Arabia, to wait another month to evaluate the situation of the oil market before deciding on any cuts in production.

Saudi Arabia, which leads the OPEC+ group, disregarded U.S. requests and went ahead with the production cut.

The move created a crisis between the U.S. and Saudi Arabia, with the Biden administration announcing it was reviewing its relationship with Saudi Arabia and President Biden vowing to take action against the Saudis.

Background: OPEC, led by the cartel's dominant producer Saudi Arabia, began working with Russia and some allied producers on market management in the mid-2010s in response to the rise of U.S. shale production.

The group adjusts output targets based on macro conditions as it looks to protect revenues and market share and prop up prices. But like any multilateral group, its decisions can be political too. 

Saudi officials insist the most recent production cut is a response to market forces, citing forces weighing on global demand growth including tightening monetary policies and China's COVID lockdowns. 

But U.S. officials argue there was no firm market rationale and that the move provides aid to Russia. White House National Security Council spokesperson John Kirby said last week that the move would "increase Russian revenues and blunt the effectiveness of sanctions."

Behind the scenes: In an attempt to push back on U.S. accusations, Saudi officials in recent days approached Arab countries that are OPEC+ members and several Arab countries that are not, and asked for public statements of support.

An official from one of the Arab countries said the Saudi pressure was on a very high level and the Saudis pressed very hard.

A former U.S. official briefed on the issue said Saudi officials pressed Arab countries to echo their message that the OPEC+ decision was purely an economic one and based on market conditions and not political.

State of play: Iraq, Kuwait, Bahrain, the United Arab Emirates, Algeria, Oman, Sudan, Morocco and Egypt all issued statements stressing the decision was made in consensus and was technical, not political.

Jordan also issued a statement of support for Saudi Arabia but called for a direct dialogue between the U.S. and Saudi Arabia to solve the crisis.

What they're saying: A spokesperson for the Saudi Embassy in Washington declined to comment.

But the Saudi Embassy tweeted a statement on Monday stressing it views the relationship with the U.S. as strategic and that the OPEC+ decision was based on economics, not politics.

Axios' Ben Geman provided additional reporting to this story. 

Scoop: Saudis pressed Arab nations to publicly support OPEC+ cut

The Biden administration blames Saudi Arabia for the move, which the U.S. claims will strengthen Russia.

Secretary-General of OPEC Haitham al-Ghais (R) and Saudi Arabia's Minister of Energy Prince Abdulaziz bin Salman Al-Saud (2nd L) hold a press conference

Saudi Energy Minister Prince Abdulaziz bin Salmand (2nd from left), Secretary-General of OPEC Haitham al-Ghais (right) and other officials hold a press conference on Oct. 5. Photo: Askin Kiyagan/Anadolu Agency via Getty Images

OPEC

China is becoming the most formidable rival America has faced, and the risk of confrontation with Russia, North Korea or Iran still looms. Authoritarians are rising, the chaotic Afghanistan exit revealed the limits of U.S. power, and the pandemic, climate change and other critical challenges continue to pose grave threats.

World

President Biden has made the COVID-19 crisis and a post-Trump return to national unity and traditional democratic ideals his top priorities. From vaccinations to stimulus to schools, Biden is seeking bipartisan compromise while showing a willingness to use executive authority and bare Democratic majorities in the U.S. House and Senate to implement his policies. Republican leaders are navigating deep party divisions over if and how to move beyond former President Trump.

Politics & Policy

Qatar's energy minister sees his country supplying liquefied natural gas to Europe for decades, despite the EU's plans to pivot quickly to renewables in the wake of the Ukraine-related energy crisis.

Why it matters: This view confirms the anxiety among climate activists and some world leaders about locking in too much gas infrastructure.

Driving the news: European countries dependent on Russian gas to heat homes and power factories have been scrambling for alternative supplies and the infrastructure to receive them, and many are turning to tiny Qatar, a global gas powerhouse.

In a wide-ranging interview with Axios, Qatari Energy Minister Saad bin Sherida Al-Kaabi said Europe made a mistake in pushing to switch to renewable energy too quickly while remaining dependent on Russian gas supplies for baseload power.

Qatar and the U.S. rank as the world's top LNG suppliers, and Qatar will significantly increase its capacity when new facilities open in 2026.

Al-Kaabi met with energy secretary Jennifer Granholm and top Biden energy official Amos Hochstein on Thursday in Washington.

What they're saying: "Whether it's in the US and EU, in the Americas and Europe and Asia, gas is absolutely going to be needed for a very long time," Al-Kaabi said.

"So if they have other ideas in Europe and so on, well, if they materialize into something that's a reality, and that they can transform to something else, you know, good for them. But until then we'll be serving their markets."

What we're watching: Al-Kaabi said the global community is heading into the next round of UN climate talks in Egypt after a year of emissions backsliding. This is largely due to geopolitical developments including the uneven covid recovery and the war in Ukraine.

"Realistically, what are we gonna say in COP27?" Al-Kaabi said.

"Coal today is at its highest ever utilization in the history of humanity," he said, noting coal's high CO2 emissions compared to natural gas.

"I think we're in a very delicate situation that we have to be very careful" about pushing fossil fuels to the maximum without considering the climate consequences, he said.

"Global warming is a reality that we can't hide away from." He cited QatarEnergy, which he leads, for moving aggressively into solar, carbon capture and storage and blue ammonia projects.

The intrigue: He gave his own take on whether industrialized countries should set up a fund to compensate developing countries for the climate disasters they are already experiencing as a result of the developed world's emissions.

Qatar's official position on "loss and damage," as it is known in UN climate parlance, will be decided at the political level in his government, Al-Kaabi said.

Yes, but: The creation of a loss and damage fund will be a major point of contention at COP27 in Sharm El-Sheikh.

"I would not support putting a fund together or whatever they're trying to do to compensate [countries] because I think there are much bigger polluters than us that would not actually participate in doing it," he said.

Our thought bubble: This response illustrates the difficulty negotiators will have in coming away from COP27 with a tangible funding mechanism, given a perceived first-mover disadvantage.

Qatar's energy minister foreshadows COP27 fight

The issue of "loss and damage" will play an outsized role at COP27.

Photo illustration of Energy Minister for Qatar Saad Sherida al-Kaabi and an image of natural gas flames

Photo illustration: Annelise Capossela/Axios. Photo: Karim Jaafar/AFP via Getty Images

Fossil fuels

Alternative energy

Sneak Peek

Axios Sneak Peek

President Biden has tried to convince the Saudis to pump more oil with honey. Now he's trying vinegar. 

Why it matters: With a new warning that the White House might support legislation targeting OPEC+ in Congress, Biden crossed a symbolic threshold — and sent a clear signal to the Saudis that he’s prepared to escalate. 

For some Democrats, he needs to go further: "President Biden ... should call the King himself," Rep. Ro Khanna (D-Calif.) told Axios. "He should say you have five days to reverse your decision. If not, I am going to work with Congress to pass a ban on supplying air parts to your Air Force.

"The American people have had enough. We will not be bullied by a third-rate power that is committing human rights atrocities."

Between the lines: Biden is now at odds with the two entities — Big Oil companies and Big Oil countries — that have the power to solve his most pressing domestic political problem: rising prices at the pump. 

Biden has consistently blamed oil and gas companies for high prices and used a visit to FEMA headquarters last week to revive his warning: "Do not — do not — do not use this storm [Hurricane Ian] as an excuse to raise gasoline prices or gouge the American public," he said. 

Driving the news: Administration officials were scrambling over the weekend with a last-minute lobbying effort to dissuade OPEC+ from lowering its production targets, reportedly describing the prospect as a "total disaster."

That effort failed and OPEC+ on Wednesday announced its 2 million barrels a day cut, scheduled for next month. 

The White House fired back with a double-barreled shot from Jake Sullivan, the national security adviser, and Brian Deese, the director of the National Economic Council. 

Their joint statement was designed to suggest the White House would reverse course and support bipartisan legislation — so-called NOPEC — that would make the oil-producing cartel legally liable for any price collusion.  

Behind the scenes: While some Democrats privately suspect Saudi Crown Prince Mohammed bin Salman of engineering the cut to hurt their party in November, White House officials don’t go as far.  

Two of Biden's most senior advisers were in Saudi Arabia just 10 days ago, in part to deal with potential oil cuts and energy security.

Many officials thought the trip had managed to open a new page with the Saudis, Axios' Barak Ravid notes.

What they're saying: Khalid Aljabri, a Saudi dissident, made a direct link between OPEC's move and the midterms. "This unprecedented cut is nothing short of a naked assault on democracy and election interference to harm Biden and the Democrats," he alleged.

"I think it’s time for a wholesale re-evaluation of the U.S. alliance with Saudi Arabia," Sen. Chris Murphy (D-Conn.), a top critic of the Saudis, told CNBC on Tuesday.

The intrigue: The White House has other cards to play. But all of them are controversial.

A potential nuclear deal with Iran could bring more than a million barrels of oil a day onto international markets. 

The White House hinted Wednesday they reserve the right to release more oil from the Strategic Petroleum Reserve — beyond the 10 million barrels in the November release it has already announced. Republicans will howl, but the president's authority is clear. 

The Biden administration can also turn to Venezuela. The Wall Street Journal scooped Wednesday evening that Biden is preparing to scale down sanctions on the Maduro regime to allow Chevron to resume its activities.

The other side: Republicans are already using OPEC's cut to criticize Biden.

"Joe Biden caused this crisis with his destructive energy policies and foreign policies. I'm deeply disappointed by the Saudi decision and wish they would act more like an ally during current conditions, but this is Joe Biden's fault," Sen. Ted Cruz (R-Texas) told Axios.

Go deeper: What OPEC's 2 million-barrel cut could mean for U.S. gas prices

Biden's new Saudi strategy

Biden sent a clear signal to the Saudis that he’s prepared to escalate after OPEC's production cut.

President Biden fist-bumps with Saudi Crown Prince Mohammed bin Salman on July 15. Photo: Royal Court of Saudi Arabia/Handout/Anadolu Agency via Getty Images

Saudi Arabia

Shell CEO Ben van Beurden will step down at year's end after nine years that included new climate initiatives and weathering the shock of the COVID pandemic.

Why it matters: Wael Sawan, currently head of Shell's integrated gas, renewables and energy solutions unit, will replace van Beurden as CEO of one of the world's most powerful energy companies.

Alongside other European-based giants, Shell is diversifying into more climate-friendly business lines like EV charging and offshore wind, but also facing criticism that it's moving too slowly.

Catch up fast: Van Beurden became CEO in early 2014 and has been with the company for almost 40 years.

"The first big move of his tenure as CEO...was the takeover of rival BG Group Plc, a deal valued at close to $50 billion that tested the company’s finances during an oil price slump, but is now paying off as natural gas prices soar," Bloomberg notes.

What we're watching: Follow This, a climate-focused shareholder advocacy group, offered a mix of praise and criticism of van Beurden as it signaled upcoming pressure campaigns on the new boss.

Oil majors are hauling in huge profits amid high commodity costs, while demand looks set to remain robust for the foreseeable future. 

But Follow This warns that Sawan "has to make bold decisions to explore new business models instead of new oil and gas. If he fails to deliver deep emissions cuts, he puts the company at great financial risk."

Yes, but: Per the Financial Times, RBC Capital Markets analyst Biraj Borkhataria does not expect a major change in the company's posture with van Beurden's departure.

“The shift is likely to be more of a continuation than revolution of the strategy put in place by van Beurden," Borkhataria said.

Sawan's elevation was "well anticipated," JPMorgan Chase & Co. analyst Christyan Malek said in a note reported by Bloomberg. “We expect him to maintain Shell’s pragmatic and holistic approach to the energy transition," Malek said.

Shell taps new CEO amid transition push

Sawan will replace Ben van Beurden as CEO of one of the world's most powerful energy companies.

Illustration of sea binoculars made from a Shell logo 

Big Oil

West Texas Intermediate crude oil futures

Data: Yahoo Finance; Chart: Skye Witley/Axios

The White House is more than happy to point out gasoline prices have been falling for over two months. But Democrats aren't out of the political woods on energy costs.

The big picture: Crude prices — the biggest variable in gas prices — have regained ground over the last couple of weeks after falling steeply in recent months.

WTI, the U.S. benchmark, is trading in the mid-$94 range this morning.

GasBuddy analyst Patrick De Haan tells Axios that if the oil price drop is over, for now, average U.S. prices should level out around $3.69 per gallon or maybe somewhat lower.

That's way below the $5 average reached in mid-June, but still fairly steep by historical standards. 

Threat level: Gasoline prices are the most visible energy cost but hardly the only one. Axios' Matt Phillips reports that Europe's natural gas crisis is spilling into the U.S. market.

U.S. natural gas prices briefly hurdled $10 per million British thermal units (BTUs) on Tuesday, the highest since 2008. They are up more than 150% this year. 

Why it matters: U.S. prices are nowhere near European levels, but they'll still almost certainly push electric and heating bills higher. 

So keep an eye on the political impact of heating bills heading into the fall and winter, which could reinvigorate voter angst about rising costs of living, despite progress elsewhere on inflation.=

The intrigue: Getting back to gasoline, Bloomberg has a good story on the politics as prices have come down under $4 per gallon (currently $3.88 per AAA).

The decline blunts a key political weapon for Republicans, the piece points out, but also quotes analysts saying gas prices are still a factor — especially if they go back up.

What we're watching: Oil prices got a lift this week after the Saudi energy minister floated the idea that OPEC+ could cut production.

It's just tea leaves, but that could suggest the cartel hopes current prices are something of a floor. Whether and when European efforts to isolate Vladimir Putin start taking a significant bite out of Russian supplies is another variable.

Democrats aren't out of the woods yet on energy prices

Higher natural gas prices will reach consumers.

The Department of the Interior proposed Friday a new five-year plan to narrow the area for offshore drilling lease sales to the Gulf of Mexico and Alaska's Cook Inlet. 

Why it matters: The plan, which rules out drilling on the East and West Coast, is a significant cutback on a Trump-era target that pushed for a broader range of offshore drilling opportunities.

Details: The Biden administration is proposing up to 10 oil and gas lease sales in the Gulf of Mexico and one in the northern portion of Cook Inlet over the next five years. Both areas have "existing production and infrastructure," according to the Interior.

The final program "may include fewer potential lease sales, including no lease sales," the Interior noted in a release Friday.

What they're saying: Friday's announcement "removes from consideration the federal waters off the Atlantic and Pacific coasts while inviting public comment on 10 potential sales in the Gulf of Mexico and one in the Cook Inlet off south-central Alaska," Secretary of the Interior Deb Haaland said in a statement. 

"From Day One, President Biden and I have made clear our commitment to transition to a clean energy economy. Today, we put forward an opportunity for the American people to consider and provide input on the future of offshore oil and gas leasing."

Evergreen Action, a climate change advocacy group, called the draft plan encouraging but called for the administration to stop all new offshore sales. 

"[A]ny new leasing would be incompatible with the science, with President Biden’s climate and environmental justice commitments, and with an economy that supports American consumers with cheaper clean energy," Evergreen Action chief of staff Lena Moffitt said in a statement. 

"It’s time we say no to more giveaways to fossil fuel corporations and end any new offshore oil and gas leasing."

The American Petroleum Institute (API) released a statement criticizing the fact that the proposal "leaves open the possibility of no new offshore lease sales."

Interior proposes offshore drilling plan that would allow up to 11 lease sales

The five-year plan would narrow the area for leases to the Gulf of Mexico and Alaska's Cook Inlet.

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